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Binance To Launch New Smart-Contract Oriented Blockchain To Parallel Its Main Chain

May 27, 2020
Ross Peili


Binance To Launch New Smart-Contract Oriented Blockchain To Parallel Its Main Chain

From a dark-web focused unregulated and completely anonymous marketplace, cryptocurrency exchanges have come a long way since the infamous Mt. Gox and evolved into regulated financial services providers such as Binance, following anti-money laundering (AML) rules, while including mandatory know-your-customer (KYC) procedures for each trader whether academic or not.

Even further, modern cryptocurrency exchanges of the likes of Binance are so much more than just an exchange medium you can’t really tell what are their main attributes or where do they focus from a business perspective. 

Surely, a balanced fee structure would allow most legally covered exchanges to operate with a positive-sum, but in some cases leeching of people’s transactions is just not enough, hence some of the most popular cryptocurrency exchanges focus on diversifying their services and don’t rely on an attractive fee structure.

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Take Binance for example. Earlier this year, the world’s leading crypto exchange published a white paper subjecting a new smart contract oriented blockchain, second to Binance’s own chain, and dubbed Binance Smart Chain, where smart contracts will exist parallel to the main chain the document cited.

In addition, Binance had recently acquired the web’s oldest and most used cryptocurrency tracker for an astonishing $400mn worth of cryptos and fiat. 

A quick visit at Binance’s portal in 2020, gives you a glimpse of what’s possible with the platform, which covers a big spectrum of blockchain services available ranging from trading tools to staking, loans, education, futures, crypto debit, and asset tokenization.  

Other major exchanges including OKEx, and Huobi, have also moved to their own blockchain’s ditching their previous third-party base-layer platform that in most cases was the public Ethereum blockchain. 

According to Forbes, crypto exchanges are among the “biggest winners of the growing popularity of cryptocurrencies”, and for a pretty self-explanatory reason, considering that it is the marketplace where people buy, sell, and exchange their digital assets. 

More specifically, the US-based crypto broker and exchange Coinbase reported revenue of $1.3bn back in 2018, while Binance topped its first billion in profits last year, signifying a new era from crypto exchanges. 

Furthermore, Binance’s new white paper of its smart-contract oriented chain claims that this is not an opportunity to compete with Ethereum, but rather a layer to accommodate the smart contracts involved with Binance’s DEX (decentralized exchange), which according to the document, is the company’s primary focus. 

The way I see it, hell yeah it’s a competition, analogizing Binance bets on DeFi (decentralized finance) instead of the Ethereum itself, which paradoxically and again, is the source of DeFi.

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Of course, Binance is not the first and certainly not the last exchange to jump on the DeFi train, yet most DEXs utilize the Ethereum blockchain which empowers them with dapps and templates that make creators’ life much easier. Ethereum managed to be the leader in DeFi thanks to projects and protocols such as 0x, MakerDAO, ERC-721, and more. 

Therefore, Binance would have to upscale its game at least to the same point if not further in any scenario where it succeeds being an alternative to the Ethereum DeFi ecosystem.  Impossible? Not. At least not for Binance, after all its achievements since its launch a few years back.